Studied by 350 PeopleA rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following?
forward integration
horizontal integration
current transformation
backward integration
keiretsu
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A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following?
forward integration
horizontal integration
current transformation
backward integration
keiretsu
backward integration
Which of the following is an advantage of the postponement technique?
reduction in training costs
reduction in automation
early customization of the product
better quality of the product
reduction in inventory investment
reduction in inventory investment
Which of the following costs would be incurred even if no units were produced?
purchasing costs
building rental costs
direct labor costs
transportation costs
raw material costs
building rental costs
The main trait of a single-period model is that:
the cost of a shortage cannot be determined accurately.
supply is limited.
it has the largest EOQ sizes.
inventory has limited value after a certain period of time.
the order quantity should usually equal the expected value of demand.
inventory has limited value after a certain period of time.
Which of the following statements is true regarding the leverage of supply chain savings?
Supply chain savings exert more leverage as the firm's net profit margin decreases.
Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales.
Supply chain leverage depends only upon the percent of sales spent in the supply chain.
Supply chain leverage is about the same for all industries.
None of the above is true.
Supply chain savings exert more leverage as the firm's net profit margin decreases.
Which of the following would NOT generally be a motive for a firm to hold inventories?
to hedge against inflation
to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand
to take advantage of quantity discounts
to minimize holding costs
to decouple various parts of the production process
to minimize holding costs
Which of the following is an element of inventory holding costs?
material handling costs
housing costs
investment costs
pilferage, scrap, and obsolescence
All of the above are elements of inventory holding costs.
All of the above are elements of inventory holding costs.
Which of these statements about the production order quantity model is FALSE?
All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity.
Average inventory is more than one-half of the production order quantity.
Because receipt is noninstantaneous, some units are used immediately and not stored in inventory.
The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous.
None of the above is false.
Average inventory is more than one-half of the production order quantity.
The purpose of safety stock is to:
control the likelihood of a stockout due to variable demand and/or lead time.
eliminate the likelihood of a stockout due to erroneous inventory tally.
protect the firm from a sudden decrease in demand.
eliminate the possibility of a stockout.
replace failed units with good ones.
control the likelihood of a stockout due to variable demand and/or lead time.
A disadvantage of the fixed-period inventory system is that:
additional inventory records are required.
the average inventory level is decreased.
since there is no count of inventory during the review period, a stockout is possible.
it involves higher ordering costs than the fixed quantity inventory system.
orders usually are for larger quantities.
since there is no count of inventory during the review period, a stockout is possible.
Low-level coding means that:
the lowest-paid staff member in the production department performs the coding.
the top level of the BOM is below level zero and that BOMs are not organized around the finished product.
a component item is coded at the lowest level at which it appears in the BOM structure.
a final item has only a few levels in the BOM structure.
the code being used is the code for the lowest level in the BOM structure.
a component item is coded at the lowest level at which it appears in the BOM structure.
Which of the following is NOT a goal of JIT partnerships?
obtain improved quality and reliability
removal of unnecessary activities
removal of in-plant inventory
removal of in-transit inventory
All of the above are goals of JIT partnerships.
All of the above are goals of JIT partnerships.
A product-focused process is commonly used to produce:
high-volume, low-variety products.
low-variety products at either high- or low-volume.
low-volume, high-variety products.
high-volume, high-variety products.
high-volume products of either high- or low-variety.
high-volume, low-variety products.
Which of the following phrases best describes process focus?
Operators are less broadly skilled.
low volume, high variety
Finished goods are usually made to a forecast and stored.
low inventory
high fixed costs, low variable costs
low volume, high variety
The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is:
outsourcing.
keiretsu.
offshoring.
a standard use of the make-or-buy decision.
not allowed by the ethics code of the Supply Management Institute.
outsourcing
Savings in the supply chain exert more leverage as the firm's net profit margin decreases.
True
False
True
Which of the following is NOT an opportunity for effective management in the supply chain?
accurate "pull" data
vendor-managed inventory
CPFR
postponement
local optimization
local optimization
A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following?
horizontal integration
current transformation
backward integration
job expansion
forward integration
backward integration
The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.
True
False
True
The bullwhip effect:
occurs because of distortions in information in the supply chain.
results in increasing fluctuations at each step of the sequence.
increases the costs associated with inventory in the supply chain.
occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers.
All of the above are true.
All of the above are true.
Which of the following is NOT an opportunity for effective management in the supply chain?
local optimization
CPFR
accurate "pull" data
postponement
vendor-managed inventory
local optimization
Which of the following statements about ABC analysis is FALSE?
ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items.
Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.
In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have.
ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
Which of the following is an element of inventory holding costs?
material handling costs
housing costs
pilferage, scrap, and obsolescence
investment costs
All of the above are elements of inventory holding costs.
All of the above are elements of inventory holding costs.
In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will:
increase by about 41%.
increase by 200%.
either increase or decrease.
increase, but more data is needed to say by how much.
increase by 100%.
increase by about 41%
Which of the following statements regarding the production order quantity model is TRUE?
It minimizes inventory.
It relaxes the assumption that all the order quantity is received at one time.
It minimizes the total production costs.
It applies only to items produced in the firm's own production departments.
It relaxes the assumption that the demand rate is constant.
It relaxes the assumption that all the order quantity is received at one time.
The purpose of safety stock is to:
protect the firm from a sudden decrease in demand.
eliminate the possibility of a stockout.
control the likelihood of a stockout due to variable demand and/or lead time.
replace failed units with good ones.
eliminate the likelihood of a stockout due to erroneous inventory tally.
control the likelihood of a stockout due to variable demand and/or lead time.
The main trait of a single-period model is that:
supply is limited.
the cost of a shortage cannot be determined accurately.
it has the largest EOQ sizes.
the order quantity should usually equal the expected value of demand.
inventory has limited value after a certain period of time.
inventory has limited value after a certain period of time.
All EXCEPT which of the following statements about ABC analysis are true?
ABC analysis suggests that all items require the same high degree of control.
ABC analysis is an application of the Pareto principle.
ABC analysis suggests that there are the critical few and the trivial many inventory items.
ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume.
In ABC analysis, inventory may be categorized by measures other than dollar volume.
ABC analysis suggests that all items require the same high degree of control.
The two most basic inventory questions answered by the typical inventory model are:
timing of orders and cost of orders.
ordering cost and carrying cost.
timing of orders and order quantity.
order quantity and cost of orders.
order quantity and service level.
timing of orders and order quantity.
Low-level coding means that:
the code being used is the code for the lowest level in the BOM structure.
the top level of the BOM is below level zero and that BOMs are not organized around the finished product.
a component item is coded at the lowest level at which it appears in the BOM structure.
a final item has only a few levels in the BOM structure.
the lowest-paid staff member in the production department performs the coding.
a component item is coded at the lowest level at which it appears in the BOM structure.
Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT?
close relationships with trust
close relationships with skepticism
distant relationships with trust
distant relationships with skepticism
none of the above
close relationships with trust
What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?
lot sizing
time phasing
time fences
closed loop system
modular bills
time fences
Enterprise resource planning (ERP):
automates and integrates the majority of business processes.
does not integrate well with functional areas other than operations.
seldom requires software upgrade or enhancement.
is inexpensive to implement.
all of the above
automates and integrates the majority of business processes.
Which of the following is generally found in most Lean environments?
a push system for high margin items and a pull system for low margin items
pull systems
a push or pull system, depending upon the rate of demand
push systems
a push system for purchased parts and a pull system for manufactured parts
pull systems
Which one of the following is a characteristic of a JIT partnership?
third-party logistics never used
removal of incoming inspection
frequent deliveries in large lot quantities
active pursuit of vertical integration
maximal product specifications imposed on supplier
removal of incoming inspection
How can a reduction of in-transit inventory be encouraged?
supplier location near plants
low carrying costs
low-cost, global suppliers
use of trains, not trucks
high setup costs
supplier location near plants
Lean operations are known for their:
supplier partnerships.
employee development.
challenging jobs.
supplier education.
All of the above are attributes of lean operations.
All of the above are attributes of lean operations.
Which of the following industries is most likely to have low equipment utilization?
restaurants
steel manufacturing
commercial baking
auto manufacturing
television manufacturing
restaurants
An assembly line is an example of a:
line process.
product-focused process.
process-focused process.
repetitive process.
specialized process.
repetitive process.
Which of the following phrases best describes product focus?
high inventory
high fixed costs, low variable costs
Finished goods are usually made to order.
Processes are designed to perform a wide variety of activities.
low volume, high variety
high fixed costs, low variable costs
A grocery store is attempting to implement a kanban system. Which of the following would NOT be an application of kanbans?
An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts.
A red light on top of the cashier's lane signals that the cashier needs additional change replenished.
A line of 5 people in the Chinese department signaling the department to heat 5 orders of crab rangoon.
The meat department stocking up on turkeys before Thanksgiving.
All of the above are kanban applications.
The meat department stocking up on turkeys before Thanksgiving.
Which of the following industries is most likely to have low equipment utilization?
television manufacturing
restaurants
commercial baking
auto manufacturing
steel manufacturing
restaurants
Which of the following is one of the four principles of bottleneck management?
Bottlenecks should be moved to the end of the system process.
Lost time at a non-bottleneck is lost system capacity.
Increased non-bottleneck capacity is increased system capacity.
Increasing capacity at bottleneck stations is a mirage.
Release work orders to the system at the bottleneck's capacity pace.
Release work orders to the system at the bottleneck's capacity pace.
Utilization will typically be lower than efficiency because:
effective capacity is less than design capacity.
expected output is less than rated capacity.
effective capacity is greater than design capacity.
expected output is less than actual output.
effective capacity equals design capacity.
effective capacity is less than design capacity.
Which of the following is FALSE regarding repetitive processes?
They include the assembly of basically all automobiles.
They use modules.
They allow easy switching from one product to the other.
They have more structure and less flexibility than a job shop layout.
They are the classic assembly lines.
They allow easy switching from one product to the other.
In mass service and professional service, the operations manager should focus extensively on:
automation.
human resources.
cost-cutting initiatives.
equipment maintenance.
sophisticated scheduling.
human resources.
Which of the following are all strategies for improving productivity in services?
high interaction, mass customization, service factory, and just-in-time
lean production, strategy-driven investments, automation, and process focus
reduce inventory, reduce waste, reduce inspection, and reduce rework
separation, self-service, automation, and scheduling
process focus, repetitive focus, product focus, and mass customization focus
separation, self-service, automation, and scheduling
Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine to be running during approximately 95% of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 75%. What is the expected weekly output of cranks for this company?
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